Floor set for milk prices
Prices appear to have stabilised at the Global Dairy Trade auction, stopping the previous slide.
The average price rose 1.5 percent to US$3815 (NZ$6544) a tonne.
It comes after a run of three consecutive slides - including an almost 5 percent drop a fortnight ago which prompted Fonterra to lower its 2026/27 milk price forecast from $9.75/kg of milk solids to $9.25/kg of milk solids.
In a note, New Zealand Exchange head of dairy insights Cristina Alvarado said it was broadly aligned with expectations that prices would stabilise following the recent correction.
“While the increase was modest, it suggests buyers were willing to re-enter the market once prices returned to more attractive levels, particularly for milk powders.”
Whole milk powder prices, which act as a price indicator for farmers, increase 1.6 percent to US$3486 (NZ$5979).
Skim milk powder was up 2.8 percent and butter milk powder was up 10.5 percent.
“The recovery in milk powders was broadly consistent with recent movements in dairy derivatives markets, which had been signalling improved support following the sharp declines seen earlier this month,” Alvarado said.
Prices were mixed across other commodities.
Anhydrous milk fat was up 1.1 percent, mozzarella up 1.3 percent, while butter dropped 0.6 percent and cheddar was down 6.5 percent.
Alvarado said the improvement came despite continued strong milk production across most major exporting regions during April and May, though weather concerns had helped improve market sentiment and provided support to dairy commodity prices.
“However, attention is increasingly shifting towards the impact of prolonged heatwaves across Europe and the United States, where high temperatures are beginning to weigh on milk production and raise questions over supply growth during the remainder of the northern hemisphere summer.”
She said although New Zealand started the new dairy season strongly, with June milk collections up 4.5 percent year-on-year, June was the smallest production month of the season and volumes would increase significantly over the coming months.
Forecasts of El Niño conditions developing towards the peak of New Zealand’s production season continue to present uncertainty around milk output later in the year, she said.
Alvarado felt the recent downward correction may have established a near-term floor.
“Demand appears to be responding to lower price levels, while emerging weather-related supply concerns are providing additional support.
“The sustainability of this recovery will now depend on whether weather-related production constraints become more evident across the northern hemisphere and whether buying interest from Asia can be maintained as New Zealand’s seasonal milk production gathers pace.”